HR Law Talkhttps://www.bassberryhrlawtalk.com
Mon, 19 Nov 2018 19:46:49 +0000en-UShourly1https://wordpress.org/?v=4.9.8Qualified Retirement Plans: Recent Updates and Action Itemshttps://www.bassberryhrlawtalk.com/qualified-retirement-plans-recent-updates-and-action-items/
https://www.bassberryhrlawtalk.com/qualified-retirement-plans-recent-updates-and-action-items/#respondThu, 15 Nov 2018 18:46:07 +0000https://www.bassberryhrlawtalk.com/?p=2591As the end of the calendar year approaches, sponsors of qualified retirement plans should consider whether their plan documents require updates to comply with important legal changes and deadlines. Below is a summary of some key legal developments that may impact your plan:

New Disability Claims Procedure Rules

As we explained in a prior alert, the U.S. Department of Labor issued new regulations that revise the required procedures for disability benefit claims filed after April 1, 2018. In addition to disability plans, these rules apply to certain retirement plans that provide disability benefits.

Under the new rule, if a claim is denied, plans must now explain the decision, including the basis for disagreeing with any disability determination by the Social Security Administration or the views of any health care professional who evaluated the claimant. The rule also requires that notices be provided in a “culturally and linguistically appropriate manner,” meaning that a claim or appeal denial letter may need to include a statement in a non-English language. If your plan includes disability claims procedures, you may need to amend your plan by the end of the plan year that includes April 2018 (December 31, 2018 for calendar year plans).

Hardship Distributions

The Bipartisan Budget Act of 2018 (the Budget Act) gives plan sponsors the option to eliminate certain restrictions on hardship withdrawals for plan years beginning after December 31, 2018. Specifically, the Budget Act eliminates:

(i) the mandatory six-month suspension of any new elective deferrals to an employer-sponsored plan following a hardship withdrawal; (ii) the restriction on taking a hardship withdrawal from qualified nonelective contributions, qualified matching contributions, or earnings on post-1986 pre-tax contributions; and (iii) the requirement that a participant take all permissible nontaxable plan loans before taking a hardship withdrawal. To the extent that a plan sponsor adopts one or more of these discretionary design changes, a plan amendment will be required by the end of the plan year in which such changes become effective (December 31, 2019 for calendar year plans).

Administrators of qualified retirement plans are required to provide a written explanation of tax consequences to recipients of eligible rollover distributions. The Internal Revenue Service (IRS) historically provides “safe harbor” model notices that plan administrators may rely upon to satisfy this notice requirement. In response to the Tax Cuts and Jobs Act of 2017, the IRS recently updated the model safe harbor notices to reflect changes in the law.

IRS Notice 2018-74 contains two separate safe harbor notices, based on whether the amount distributable from the qualified plan comes from a designated Roth account or a non-designated Roth account. In addition, the new notices now account for an extended rollover deadline for qualified plan loan offset amounts. The updated notices also reflect other changes to the rollover rules, including exemptions from the early distribution penalty for certain federal phased retirees and distributions to certain public safety employees from governmental plans. Plan administrators should review the notices they are currently using to see if they need updating.

Use of Forfeiture Accounts in Safe Harbor Plans

The IRS issued regulations permitting employers to use forfeitures to fund qualified non-elective contributions (QNECs), qualified matching contributions (QMACs), and safe harbor contributions. Previously, the IRS took the position that forfeitures could not be used to fund QNECs, QMACs, or safe harbor contributions because these types of contributions had to be fully vested at the time they were contributed to an employer’s plan.

Under the new regulations, however, employers may now use existing forfeitures to fund QNECs, QMACs, and safe harbor contributions, rather than making additional contributions to the plan for that purpose. The IRS clarified that QNECs, QMACs, and safe harbor contributions were only required to be fully vested at the time the contributions were allocated to participant accounts, rather than when first contributed to the plan. These regulations apply to plan years beginning on or after July 20, 2018, but may be applied to earlier periods. If your plan currently states that forfeitures may not be used to fund QNECs, QMACs, and safe harbor contributions, a plan amendment will be required by the end of the plan year in which such an update becomes effective.

Disaster Relief

Plan sponsors offering special disaster distributions and loans in response to Hurricane Michael or Hurricane Florence should amend their plans for these optional provisions. The affected areas include: Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia. For natural disasters occurring in 2017 (Hurricanes Irma and Maria, and the California Wildfires), plan sponsors have until the last day of the plan year beginning on or after January 1, 2019 to amend their plans.

New IRS Limits for 2019

The IRS just released the cost-of-living adjustments for various retirement plan limitations that will take effect on January 1, 2019. The key highlights for 2019 include:

The annual limit on elective deferrals for 401(k), 403(b), and most 457 plans is increased from $18,500 to $19,000.

The maximum compensation for retirement plan purposes is increased from $275,000 to $280,000.

The threshold for determining who is a “highly compensated employee” is increased from $120,000 to $125,000.

The limit on annual contributions to an IRA, which last increased in 2013, is increased from $5,500 to $6,000. The additional catch-up contribution limit for individuals aged 50 and over remains $1,000.

The catch-up contribution limit for individuals aged 50 and over who participate in 401(k), 403(b), and most 457 plans remains unchanged at $6,000.

If you sponsor a qualified plan, you should review your plan documents carefully to determine whether any of these legal changes may impact you. Please do not hesitate to contact any of the Bass, Berry & Sims attorneys in our Employee Benefits Practice Group for assistance with reviewing and, if necessary, amending your plan documents.

]]>https://www.bassberryhrlawtalk.com/qualified-retirement-plans-recent-updates-and-action-items/feed/0Looser Restrictions on HRAs on the Horizonhttps://www.bassberryhrlawtalk.com/looser-restrictions-on-hras-on-the-horizon/
https://www.bassberryhrlawtalk.com/looser-restrictions-on-hras-on-the-horizon/#respondWed, 14 Nov 2018 17:20:05 +0000https://www.bassberryhrlawtalk.com/?p=2585In an article published by Managed Healthcare Executive, I discussed the potential impact of a recently proposed regulation from the U.S. Departments of the Treasury, Health and Human Services and Labor that expands the usability of health reimbursement arrangements (HRA). The new rule as proposed would apply for most health plans beginning January 1, 2020, and would be particularly beneficial to employees of small employers who are not required to offer health plan coverage to their full-time employees under the ACA. Currently, employers of any size offering a standalone HRA without underlying major medical coverage are subject to ACA penalties. The proposed rules would change this restriction for HRAs that are used to pay for individual health insurance coverage or excepted benefits.

Doug adds that this proposal would remove some barriers for individuals not covered by major medical plans or those that currently receive no employer contributions toward healthcare.

]]>https://www.bassberryhrlawtalk.com/looser-restrictions-on-hras-on-the-horizon/feed/0DOL Proposes Easing Retirement Plan Regulationshttps://www.bassberryhrlawtalk.com/dol-proposes-easing-retirement-plan-regulations/
https://www.bassberryhrlawtalk.com/dol-proposes-easing-retirement-plan-regulations/#respondThu, 25 Oct 2018 16:24:59 +0000https://www.bassberryhrlawtalk.com/?p=2563In a Law360 article, I provided insight on the Department of Labor’s (DOL) proposed regulations on retirement plans that would make it easier for companies to join existing retirement plans or join forces to generate new ones – which has the potential to broaden the availability of workplace retirement plans to allowing small businesses. Under the proposed regulations, “a group of unrelated employers could now have a single ERISA plan,” I explained.

The DOL also advocates that the regulations would take away the burden of administering such plans as individual employers would not have to each act as a plan administrator. That burden, along with its accompanying fiduciary responsibilities, would fall instead on the employer association or firm that a company has outsourced its human resources tasks to, also known as a professional employer organization, that sponsors the plan, I explained. “In theory, someone else has all the headaches that goes with a retirement plan,” I noted.

]]>https://www.bassberryhrlawtalk.com/dol-proposes-easing-retirement-plan-regulations/feed/02018 ERISA Welfare Plan Checklisthttps://www.bassberryhrlawtalk.com/2018-erisa-welfare-plan-checklist/
https://www.bassberryhrlawtalk.com/2018-erisa-welfare-plan-checklist/#respondThu, 11 Oct 2018 14:31:28 +0000https://www.bassberryhrlawtalk.com/?p=2556We recognize that many of our clients sponsor ERISA welfare benefit plans and are currently undergoing their open enrollment process and issuing related participant communications. To assist our clients with that process, we have prepared an Automatic Participant Disclosures Checklist for use during open enrollment and throughout the plan year.

]]>https://www.bassberryhrlawtalk.com/2018-erisa-welfare-plan-checklist/feed/0Trump Seeks to Ease Rules for Multiple-Employer Retirement Plans and Required Mandatory Withdrawalshttps://www.bassberryhrlawtalk.com/trump-seeks-to-ease-rules-for-multiple-employer-retirement-plans-and-required-mandatory-withdrawals/
https://www.bassberryhrlawtalk.com/trump-seeks-to-ease-rules-for-multiple-employer-retirement-plans-and-required-mandatory-withdrawals/#respondTue, 18 Sep 2018 19:12:27 +0000https://www.bassberryhrlawtalk.com/?p=2541On August 31, 2018, President Trump signed an executive order authorizing the U.S. Department of Labor (DOL) and the U.S. Department of the Treasury to evaluate expanding access to 401(k) retirement plans. The order is designed to cut some of the administrative burdens and costs that prevent smaller employers from offering 401(k) plans to their employees. The Trump administration noted that in 2017, roughly 89 percent of larger employers offered retirement plans compared to only 53 percent of small employers (those with fewer than 100 employees).

The executive order directs the agencies to consider two main issues:

Expanding the criteria for multiple-employer plans (MEPs), under which employees of different private-sector employers may participate in a single retirement plan; and

Raising the age when individuals with traditional Individual Retirement Accounts (IRAs) and 401(k)s must start making required minimum distributions, which is currently age 70 ½.

Multiple-Employer Retirement Plans

President Trump has given the DOL six months to look for ways to expand access to workplace retirement plans for part-time workers, sole proprietors, and other entrepreneurial workers with non-traditional employer-employee relationships. One such way is by setting up MEPs, also called Association Retirement Plans (ARPs), in which multiple unrelated employers participate in the same retirement plan.

These types of plans help to reduce costs and make it easier for businesses, especially small businesses, to manage burdensome regulations. Currently, MEPs are limited to companies that share common characteristics, such as operating in the same industry. Under the executive order, however, the DOL will look at expanding the criteria for MEPs so that more companies can participate.

Changes to the Required Minimum Distribution Rules

Among the regulations that the Treasury Department will review are those governing minimum distributions that retirees must take from their 401(k)s or traditional IRAs. Presently, retirees must begin taking withdrawals at age 70 ½, or else face as much as a 50 percent penalty plus any taxes due. The required minimum distributions are based on life expectancy tables issued by the Internal Revenue Service (IRS). The IRS life expectancy tables have not been updated since April 2002, when the average life expectancy was 77 years. Now, the average life expectancy is about 78 ½ years.

In the executive order, President Trump has given the Treasury Department six months to consider delaying the start of minimum distributions to accommodate longer life spans, possibly to age 75. Adjusting these tables could allow account holders to take lower required minimum distributions, thereby keeping more money in their 401(k) plans and IRAs for longer periods.

The Trump administration would like this process to be completed within a six-month time frame, with a final rule being released sometime in 2019. Stay tuned for future posts related to developments in this area.

FMLA/ADA Considerations for Leaves of Absence: A practical, scenario-based discussion regarding extended leaves of absence and how they are regulated by application of the FMLA and the ADA, including a detailed discussion of the EEOC’s position with respect to extended leave as a reasonable accommodation.

Preventing and Addressing Workplace Violence: A comprehensive discussion of workplace violence, including strategies for preventing and properly addressing acts of violence in the workplace.

An Employers Approach to Reducing Harassment: Questions employers should ask as they strive to reduce harassment in the workplace and cultivate a healthy working environment.

]]>https://www.bassberryhrlawtalk.com/labor-employment-seminar-august-2018/feed/0Is a Reduced Work Schedule for a Full-Time Employee a Reasonable Accommodation?https://www.bassberryhrlawtalk.com/reduced-work-schedule/
https://www.bassberryhrlawtalk.com/reduced-work-schedule/#respondWed, 18 Jul 2018 15:49:48 +0000https://www.bassberryhrlawtalk.com/?p=2522The recent Sixth Circuit opinion in Hostettler v. The College of Wooster, No. 17-3406 (6th Cir. July 17, 2018), is a cautionary tale for employers faced with a full-time employee seeking a modified work schedule as an accommodation for a disability under the Americans with Disabilities Act (ADA).

An HR Generalist for the College, Hostettler was unable to return to work full time after the conclusion of her 12 weeks of maternity leave because of postpartum depression and separation anxiety. The district court granted summary judgment to the College, finding that full-time work was an essential function of the position and that Hostettler was not a qualified individual under the ADA because she could not perform that essential function.

The Sixth Circuit disagreed, holding that while “regular, in person attendance is an essential function” of most jobs, a fact specific analysis is required. The Sixth Circuit emphasized the necessity of a fact specific analysis in each case to the point of holding that “[on] its own,….. full-time presence at work is not an essential function. An employer must tie time-and-presence requirements to some other job requirement.”

The court noted that the record included testimony of Hostettler and a co-worker that she had completed all of her tasks while working a part-time schedule. Further, the record also included a glowing evaluation given to Hostettler while she was on a part-time schedule by the supervisor who discharged her with no indication of Hostettler being needed on a fulltime schedule and testimony from the same supervisor that Hostettler never failed to timely complete a responsibility (except for some tasks that she could not identify during her deposition).

Employers Must Demonstrate that Full-Time Schedule is Essential for ADA Compliance

The Sixth Circuit concluded that “[a]n employer cannot deny a modified work schedule as unreasonable unless the employer can show why the employee is needed on a full-time schedule; merely stating that anything less than full-time employment is per se unreasonable will not relieve an employer of its ADA responsibilities.”

Once again, employers are cautioned to make a “fact specific inquiry” on each occasion in which a disabled employee is seeking an accommodation, both with respect to the essential functions of the position and the accommodation being requested.

For questions or additional information about reasonable accommodations for employees, contact Bob Horton or another Bass, Berry & Sims labor and employment attorney.

]]>https://www.bassberryhrlawtalk.com/reduced-work-schedule/feed/0How to Reduce Harassment in the Workplacehttps://www.bassberryhrlawtalk.com/how-to-reduce-harassment-in-the-workplace/
https://www.bassberryhrlawtalk.com/how-to-reduce-harassment-in-the-workplace/#respondFri, 06 Jul 2018 21:28:08 +0000https://www.bassberryhrlawtalk.com/?p=2515In an article published in the Nashville Business Journal’s Largest Employers special report on July 6, 2018, I provided a column highlighting three important questions for employers to ask as they strive to reduce harassment in the workplace and cultivate a healthy workplace environment. The effectiveness of an anti-harassment policy often comes down to employee perception of how the policy is enforced, trained and embraced by leadership, so it is important that employers are mindful of the answers to these questions:

Do employees perceive the anti-harassment policy as having integrity?

Do employees perceive training as mere litigation risk avoidance or as attempting transformation?

Do employees perceive this tone “at the top?”

The answers to these questions are important to inform the need to adapt policies to optimize their impact on employee confidence in the policy, clarity of the policy’s anti-harassment message and, ultimately, a healthy workplace environment.

]]>https://www.bassberryhrlawtalk.com/how-to-reduce-harassment-in-the-workplace/feed/0The Future of Class Action Waivers in Arbitration Agreementshttps://www.bassberryhrlawtalk.com/class-action-waivers-arbitration-agreements/
https://www.bassberryhrlawtalk.com/class-action-waivers-arbitration-agreements/#respondTue, 03 Jul 2018 19:02:22 +0000https://www.bassberryhrlawtalk.com/?p=2512I authored an article for Modern Restaurant Management magazine outlining the Supreme Court’s recent decision impacting the future of class action waivers in arbitration agreements. In May 2018 the Supreme Court issued a decision in three consolidate cases NLRB v. Murphy Oil USA Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris ruling that “an employer may require an employee, as a condition of employment, to enter into an arbitration agreement in which the employee agrees to waive the right to bring a class or collective action.”

In the ruling, the court majority:

Held that the FAA [Federal Arbitration Act] (passed in 1925) clearly requires enforcement of private arbitration agreements according to their terms.

Rejected the argument that Section 7 rights under the NLRA (passed in 1935) trump enforcement of an arbitration agreement by means of the savings clause of the FAA.

Held that one Act of Congress will displace another only upon a showing of a “clear and manifest” congressional intention to do so and that “implicit” repeal of one statute by another is strongly disfavored.

]]>https://www.bassberryhrlawtalk.com/class-action-waivers-arbitration-agreements/feed/0Tension between State and Federal Laws Regarding Medical Marijuana Use in Workplacehttps://www.bassberryhrlawtalk.com/medical-marijuana-workplace/
https://www.bassberryhrlawtalk.com/medical-marijuana-workplace/#respondThu, 21 Jun 2018 19:49:44 +0000https://www.bassberryhrlawtalk.com/?p=2508Bass, Berry & Sims attorney Dustin Carlton discussed the tension that exists between state and federal laws regarding medical marijuana use in the workplace. While marijuana remains a controlled substance under federal law and currently illegal to use, many states have legalized the drug for medical and even recreational use. Many employers are faced with remaining compliant with these opposing laws. Dustin recommends employers review any current zero-tolerance policies in light of new state laws, “If you are a multi-state employer, you need to assume you need to make some modifications to tailor to each individual state, or make concessions in terms of past practices.”

Several recent cases have shown how divided courts are on this issue – previously, most courts ruled in favor of the federal law, but more recent courts have upheld state law. When asked whether this might indicate a new trend of upholding state marijuana laws over federal, Dustin said, “It’s tough to say — feels like it’s more of a trend, but I don’t know if I can really opine on that. You’d like to think they are more of an anomaly, but considering some of the unique statutory framework, I would expect there to be more challenges to it, more settlements, modifications to past policies to prevent litigation.”